Short Marx Notes

If you read a biography of Karl Marx you have to wonder if he didn’t like capitalism simply because he was terrible at it—he lived his entire life in debt. Marx was descended from eminent lines of rabbis, but harsh anti-semitic laws convinced his father to convert, and all of Marx’s life his venomous tongue was quick to utter some horrifying maxims about Judaism.

Marx looked at history, discarded philosophy, religion, ethics, nationalism, and said to look at the people. Each of society’s movements from slavery to feudalism to capitalism can be traced to a ruling class extracting wealth from the people, be it a slave, serf, or factory worker. Even though all the ‘wealth’ was coming from the workers, they were still at the mercy of hte ruling class because they didn’t control any of the means of production. In Marx’s view religion (“opium of the people” ), patriotism, laws, culture, and morality all are merely means of keeping the worker in his place and support the production process. This superstructure ties everyone to material thinking and desires, therefore perpetuating the cycle of exploitation of the working class. Revolutions happen as a result of new technology, and a conflict of the classes occurs whenever society switches to new means of production, but the workers always end up at the bottom of the totem pole because they are in, by definition, a class society. Marx postulated that because capitalism rested on a class system, revolution and victory by the workers was inevitable, because only in a classless society could said revolution be avoided. Because capitalism produces so much, it is a necessary precursor for socialism to occur. Marx did not consider Russia or Germany for his revolution, because they didn’t have sufficient industrial resources, he thought Communism would take place in England and France first. Here’s what has to happen for the revolution to take place:

Falling profit rates and accumulation of capital

Increasing concentration of economic power

deepening crises and depressions

High unemployment (“industrial reserve army” )

Increasing misery of the proletariat

(from Todd Buchholz). Marx’s biggest flaw comes from the assumption that all value comes from the worker, or labor. He ignores entrepreneurship, land, capitol. Profits that Marx dubbed exploitation are actually crucial in insuring future investment and growth. The revolution never came because, however bad this economic slowdown is or how slow gigs come in the summer, workers are orders of magnitude better off than they were before. The rich get richer and the poor get richer; productivity enables total output to rise and benefit everyone. Also the worker is no longer completely separated from th emeans of production, and through things like stocks and bonds can indirectly own means of production.

I hope that few people new to Marxism/socialism take your conclusion seriously. Your analysis is overall fairly correct, but to say that Marx “ignores” land, entrepreneurship and “capitol” (Did you mean “capital”, the title of his main work) is totally false. Also, where is your evidence of the poor getting richer? It’s a blanket statement that I doubt you could back up. It’s true that the “standard of living” in the Western countries has raised, there are still throngs of reserve proletariats in the 3rd world who are certainly nowhere better off thanks to capitalism. In other words, don’t let the comfort of the people in the “developed” world fool you into thinking the dynamics Marx talked about aren’t still at work. Not only do the things he wrote about continue to occur, Lenin also talked about them in his “Imperalism”, arguing that capitalism had no choice but to expand both its markets and its reserve pool of laborers globally. It continues to this day and will continue until capitalism’s inevitable self-destruction. (Ask yourself, can a system based on limitless growth go on forever in a finite world?)

Are the poor getting richer or poorer, and where is this geographically located? Let’s take a look at the United States. Since the 1970s, the low skilled population (w/out college education) has actually witnessed a decrease in wages as measured against inflation. This has largely to due with the increasing role of international trade and the changing role of technology with respect to comparative advantage. Having a lower relative opportunity cost of producing high-skill-intensive products as compared to low-skill-intensive products, the US has been a the fore-runner in industries such as IT, pharmaceuticals, finance, etc. On the other hand, countries such as China have a lower relative opportunity cost of producing low-skill-specific products such as textiles, mining, etc. as compared to high-skill-specific products. The keywork in these last two sentences is ‘relative’. The US produces textiles more efficiently and at a lower cost than China, but it is more expensive to produce textiles in the US compared to other products. Therefore, while you see low-skilled wages dramatically rising in China, low-skilled wages in the US are, in fact, falling. Michael Moore does a good job in displaying the effects of outsourcing on the US in ‘Roger & Me’, but fails to analyze this properly. Therefore, we can see that poverty must be measured geographically as well.

Let’s attempt to do this. Inequality within countries has been rising. Moreover, inequality among nations has been rising. Therefore, must we not conclude that inequality has been rising on a population basis? NO! If we take a look at population weighted statistics on poverty and wages, inequality has in fact been decreasing on an individual basis. Because countries such as India and China have witnessed such immense amounts of growth in the last several years, and moreover, since they contain almost 1/3 of the world population, wages have in fact been rising. Inequality on a population basis increased dramatically from the early 19th century into the mid 20th century. However, since about 1950/1960 (can’t remember the exact date), inequality has been decreasing in the world.

Thus, what may we conclude from this? 1. Low-skilled workers in highly developed nations are becoming poorer, and 2. Inequality in the world is decreasing on an individual basis. We should not keep stating that it is these 3rd world nations that are aren’t able to lift themselves up from the yoke of Western imperialism. No doubt, these countries have a far way to go before we may even consider them developed nations, but it is manifestly wrong to conclude that Marx’s teleological economic schema can apply to the poor today.

For sources, look to the following:
1. “How did the world’s poorest fare in the 1990s?” by Shaohua Chen and Martin Ravallion
2. Sala-i-Martin (2004)
3. “U.S. Trade with Developing Countries and Wage Inequality” in American Economic Review